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AMD (AMD, Financials) shares moved higher after Citi upgraded the stock, pointing to the company's growing opportunity in graphics processors used for AI workloads.

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The call gives investors another reason to look beyond AMD's traditional CPU business. Demand for AI computing remains strong, and Citi appears more confident that AMD can capture a larger piece of the market with its GPU products.

That matters because Nvidia still dominates AI accelerators, but large cloud and enterprise customers are looking for more supply and more choices. AMD does not need to overtake Nvidia to benefit. Even a modest gain in share could become meaningful if AI infrastructure spending continues to grow.

For investors, the upgrade is a vote of confidence in AMD's broader data center strategy. The next thing to watch is whether customer adoption, product launches and revenue growth can support that optimism.

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(Bloomberg) -- Global banks are curbing hedge funds' leveraged bets on Asia's top chipmakers including SK Hynix Inc. and Samsung Electronics Co. after a blistering rally this year raised concerns of a potential pullback, according to people familiar with the matter.

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Brokers including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. have raised the financing cost for hedge funds to take bullish wagers on SK Hynix and Samsung Electronics shares via swaps, said the people.

Banks have also tightened the size of new trades and which firms they will give them to, the people said, asking not to be identified while discussing private information. They have taken similar steps for Taiwan Semiconductor Manufacturing Co., the people added.

Morgan Stanley is turning away clients seeking new swap trades in the two Korean stocks while some second-tier banks have also stopped accepting additional orders in the past two weeks, the people said. Some large global banks that are still willing to take new orders are assessing requests on a case-by-case basis, they added.

The moves came after a wild run in the two companies' shares this year, part of a global boom in tech stocks that is fueling fears of a bubble. The stock price of SK Hynix has more than tripled this year, while Samsung Electronics is up over 175%. These moves have helped Korea's benchmark Kospi Index jump around 100%, making it the best performing market in the world.

But the chipmakers' shares have recently come under pressure: Both SK Hynix and Samsung Electronics tumbled on Wednesday, as the tech rally faltered. At least some of the curbs started before the recent selloff, the people said.

Bank of America Corp., BNP Paribas and UBS Group AG are also lifting financing costs and restricting the size of swap trades in the two stocks, the people said.

Shares of SK Hynix and Samsung pared gains on the news. The Kospi index also gave back some of its earlier gains.

Swaps are a popular way for hedge funds to bet on assets without actually owning them and with the aid of leverage. In markets like South Korea, where few hedge funds have their own trading IDs with the exchange, swaps with brokers are the default way to bet on stocks.

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Swap financing rates quoted by the banks on SK Hynix and Samsung Electronics were increased to a range from 300 basis points to as much as 11% over the secured overnight financing rate (SOFR), the people added. With SOFR standing at 3.6%, the new rates translate into nearly 15% at the top end of the range.

That compares with financing rates between around 100 and 200 basis points above SOFR in early May, the people said. The new rates apply to new swap contracts or those being rolled over, they added.

While banks writing swaps often find other counterparties to take the other side of hedge fund clients' trades, few firms are willing to make bearish bets on the gravity-defying gains of SK Hynix and Samsung Electronics. That means banks sometimes have to deploy their own balance sheets, putting a constraint on how much business they're willing to take.

Banks are concerned that a major correction would affect the value of their clients' holdings, leading to potential defaults on margin calls and ultimately threatening losses for banks, the people said.

While one benefit of swap trades has traditionally been the built-in leverage, some banks are now insisting clients pay up in full for those positions, said the people.

Mega-IPOs including SpaceX's $75 billion listing this week are also expected to tie up bank balance sheets, giving them more incentive to control the amount of capital they deploy to trades in SK Hynix and Samsung Electronics, the people said.

Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and UBS declined to comment. Bank of America and BNP Paribas didn't immediately respond to requests for comment.

AI Frenzy

Hedge funds have shown huge interest in South Korea over the past year, after regulators lifted a short selling ban and pushed through corporate governance reforms. But much of the focus has been on the chipmakers, which are seen as key beneficiaries of the global AI race.

SK Hynix and Samsung Electronics between them now represent around 53% of Korea's benchmark Kospi Index. That is more than double their combined weight five years ago, before the frenzy around AI transformed global markets.

The insatiable demand for these stocks has in part been fueled by exchange-traded funds. Roundhill Investments's actively managed Memory ETF has seen assets surge to $16.7 billion after its inception in early April. SK Hynix and Samsung Electronics account for more than 40% of its holdings as of Thursday, according to information posted on the website of the New York-based company.

CSOP Asset Management Ltd.'s eight-month-old, Hong Kong-listed ETF seeking to replicate twice the daily performance of SK Hynix shares surpassed $10.9 billion in assets at the start of this month, according to data compiled by Bloomberg.

Financing rates quoted by banks for swap trades involving the same stocks vary wildly from bank to bank, and from client to client. They can depend on what sort of other assets — and how much — a hedge fund holds at the time, the strength of its relationship with brokers and the banks' ability to facilitate more trades.

The Kospi tumbled nearly 9% intraday on Monday, triggering a 20-minute trading halt by the exchange as investors pulled back from AI trades. SK Hynix's shares are down this month, while the CSOP fund's assets have declined.

(Update adds market reaction in the eighth paragraph, Morgan Stanley no comment in paragraph 16.)

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European companies could be entering their first margin recovery since 2022, as higher commodity prices and artificial intelligence start to support profitability. Bloomberg Intelligence data shows operating margins for companies in the Stoxx Europe 600 index are expected to grow 7.9% this year, reversing three years of declines. The improvement follows stronger-than-expected first-quarter margins, when European companies posted their strongest earnings growth in several years.

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Big Oil is set to be the biggest contributor to Europe's margin expansion, helped by rising crude prices. Miners, chipmakers, and lenders are also adding support, driven by commodity prices, AI demand, and higher rates. Banks may get another lift from AI-related job cuts, though that remains a delicate issue after Standard Chartered faced criticism when CEO Bill Winters referred to workers as lower-value human capital. In the US, layoffs also helped improve margins at companies including Block (NYSE:XYZ), Citigroup (NYSE:C), and Meta Platforms (NASDAQ:META), while the S&P 500's operating margin expanded 17% in the first quarter, the most since at least 2004, according to Bloomberg Intelligence.

Still, Europe's margin rebound looks uneven and possibly fragile. Barclays strategist Magesh Kumar said profitability growth is not broad based, with margin pressure in consumer sectors, especially autos, travel, and leisure. Stellantis (NYSE:STLA) shares fell in April after weaker-than-expected margins, while Deutsche Lufthansa (DLAKY) is expected to see its 2026 margin drop 10% and remain below its medium-term target range. If inflation stays sticky or oil remains higher because of the Middle East conflict, consumer-facing companies may struggle to pass through higher costs, possibly widening the gap between Europe's winners and losers.

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Citigroup is IBD's Stock Of The Day as it makes a blockchain move while executing on a massive turnaround that has sharply boosted profitability. On Thursday, the Wall Street Journal confirmed earlier reports about Citigroup rolling out tokenized shares of private companies for its wealthy and institutional clients. Basically, that means Citi will use a blockchain-based platform to convert equity in pre-IPO private companies into digital tokens.

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Gold fell to a fresh six-month low on Thursday as investors dump the once-hot trade on growing concern that higher inflation will force the Federal Reserve into possibly raising rates later this year, or at least keep them steady.

There are other factors at play as well.

August gold futures touched $4,046.20 on Thursday, their lowest level since November. Gold is down 6.3% this week alone, putting it on pace for a second straight weekly loss and its worst week since mid-March,  when gold fell 9.62%.

It was last down 0.5% to $4,111.10.

Fed reversal

As a safe-haven asset, investors gravitate towards the yellow metal during times of market uncertainty and in hopes that it will act as a hedge against inflation. But because gold doesn't yield anything, the metal is also especially sensitive to expectations for long-term, real interest rates.

The Iran war, now in its fourth month, has fueled inflation by pushing energy and other prices higher.

U.S. consumer inflation in May increasedat its fastest pace in three years in May, mainly from the surging prices of energy-related products. Together with a stronger-than-expected May jobs reports, expectations have grown that the Fed may need to raise interest rates by the end of the year to slow down price increases.

Next week, the Federal Reserve is expected to hold its benchmark lending rate steady at 3.50% to 3.75% during Kevin Warsh's first meeting as Fed chair. A majority of ⁠economists in a Reuters poll expect interest rates to remain unchanged ⁠this year after many were penciling in multiple rate cuts to start the year.

Traders less sanguine, and are currently pricing in a 67% chance of a Fed rate hike by December, according to the CME Group's FedWatch tool. Higher rates, if they help stamp out inflation, can make dollar-denominated assets such as Treasury securities more attractive.

The technical breakdown

Based on price chart analysis, the overall technical picture for gold remains weak.

Gold recently broke below its 200-day moving average for the first time since September 2023, which Citigroup flagged as a major negative signal. The bank has been cautious near-term on gold ever since the war escalated in March, partly due to higher energy costs springing from the closure of the Strait of Hormuz.

Long-term, Citi was more bullish, however. "Despite the negative near-term momentum, we expect gold price to eventually rebound when the Strait situation deescalates," its analysts said.

JPMorgan is more pessimistic, saying retail and institutional investors have retreated from the so-called "debasement trade" based on a belief that the U.S. dollar would continue to depreciate. The bank cited outflows from gold exchange-traded funds and weaker futures positioning as evidence of the move, tied also to concern about the size of government debt, inflation and geopolitical risks.

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(Bloomberg) -- SpaceX's initial public offering has attracted more than $70 billion in orders from retail investors, according to people familiar with the matter, as the potentially record-breaking debut enters the home stretch.

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Retail investors are expected to be allocated at least 20% of the available shares, the people said, asking not to be identified as the information isn't public. At a $75 billion IPO size, which would be the largest on record, that allocation would leave the bulk of demand from individual investors unfulfilled, according to Bloomberg calculations.

Leaving large numbers of Elon Musk's fans empty-handed in the IPO would likely amplify demand for the shares once they begin trading. Musk has attracted a strong retail following throughout his tenure leading Tesla Inc., with the cohort owning about 40% of the company's shares, according to BNP Paribas analyst James Picariello's estimates.

The rocket, satellite and artificial intelligence company has received orders from about 1,000 institutional investors, some of the people said.

The terms of the offering such as the $135 per share price and the 555.6 million shares are unlikely to change, some of the people said. SpaceX would raise about $75 billion in a deal valuing the company at around $1.8 trillion, based on the outstanding shares in its filings.

SpaceX is set to allocate less than 10% of the shares in its IPO to international orders, some of the people said. Japan's allocation was increased earlier this month to $2.5 billion from $2 billion.

Deliberations are ongoing and details of the offering including the amount allocated to retail investors could still change, the people said. A spokesperson for SpaceX didn't immediately respond to a request for comment.

Banks were expected to stop taking orders for SpaceX's IPO from institutional investors Wednesday, ahead of pricing later Thursday and trading Friday.

The IPO is expected to rank as the biggest ever, topping Saudi Aramco's $29.4 billion debut in 2019. It will set the stage for potential mega-listings from companies whose AI models compete with SpaceX's. OpenAI filed confidentially for an IPO on Monday, following Anthropic PBC which filed last week. Together with SpaceX, the three companies could add $3.6 trillion of market value to US exchanges, according to Bloomberg calculations.

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Goldman Sachs Group Inc., Morgan Stanley, Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are leading SpaceX's IPO, with 18 other banks participating. The company formally known as Space Exploration Technologies Corp. expects to make its debut on Nasdaq and Nasdaq Texas Friday under the symbol SPCX.

--With assistance from Ed Ludlow.

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Amazon (NASDAQ:AMZN) secured a $17.5 billion senior unsecured delayed draw term loan facility with Citigroup (NYSE:C). Lenders also include JPMorgan Chase (NYSE:JPM), BofA Securities (NYSE:BAC), HSBC (NYSE:HSBC), and Wells Fargo (NYSE:WFC). The facility can be drawn until September 30, 2026, with any borrowed amount maturing three years from the draw date and no financial covenants attached. Amazon shares fell 2.10% intraday.

The loan is for general corporate purposes and gives Amazon the flexibility to draw funds as needed. Earlier this week the company also filed for a five-part debt offering in Canada for up to C$14 billion.

The moves reflect a broader shift among hyperscalers toward debt markets to fund AI buildouts. Combined Big Tech AI capital outlays are on track to surpass $700 billion this year, up from roughly $600 billion previously. Meta (NASDAQ:META) filed its largest bond offering ever last October at up to $30 billion, while Alphabet (NASDAQ:GOOG) recently disclosed plans for yen-denominated bonds.

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Citi’s Panic/Euphoria Model is off the charts. Wall Street hasn’t felt this good in five years. And investors are taking chances, willing to get burned.

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(Bloomberg) -- SpaceX’s initial public offering has attracted demand for more than four times the available shares, according to people familiar with the matter, ahead of the Elon Musk-led rocket, satellite and artificial intelligence firm stopping taking orders.

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The banks are expected to stop taking orders from institutional investors after the market closes in New York at 4 p.m. on Wednesday, people familiar with the matter have said.

SpaceX’s IPO is set to price June 11 and trade the following day. The company is offering 555.6 million shares at a fixed price of $135 each, which would raise about $75 billion, and value it at about $1.8 trillion.

Orders are still being taken and details could change, the people said, asking not to be identified as the information isn’t public. A representative for SpaceX didn’t immediately respond to a request for comment.

The IPO is expected to rank as the biggest ever, topping Saudi Aramco’s $29.4 billion debut in 2019. OpenAI, whose AI models compete with those from SpaceX’s xAI business, filed confidentially for a listing on Monday, following Anthropic PBC last week. Together with SpaceX, the three companies could add $3.6 trillion of market value to US exchanges, according to Bloomberg calculations.

Goldman Sachs Group Inc., Morgan Stanley, Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are leading the deal, with 18 other banks participating. Shares in the company, which is formally known as Space Exploration Technologies Corp. will trade on Nasdaq and Nasdaq Texas under the symbol SPCX.

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President Donald Trump on Wednesday congratulated Citigroup for earning a top ranking in advising on mergers and acquisitions in the first quarter.

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